EUR/USD: consolidation likely near term – UOB

Following the recent price action, spot could now attempt a consolidative phase, as per suggestions by FX Strategists at UOB Group.

Key Quotes

24-hour view: “While we highlighted yesterday that there is ‘scope for a deeper pull-back’, the down-move exceeded our expectation (overnight low of 1.2335). Despite the subsequent bounce from the low, the undertone remains weak and it is too early to expect a resumption of the recent rally. EUR is more likely to consolidate and trade sideways at these lower levels. Expected range for today, 1.2340/1.2425”.

Next 1-3 weeks: “While upward momentum is beginning to wane, we continue to view the current movement as part of a short-term consolidation phase and another push higher towards the revised ‘target’ of 1.2570 is not ruled out just yet. That said, EUR has to move higher within the next couple of days or a prolonged consolidation around these level would increase the risk of a top quickly. Conversely, a break of 1.2290 (‘stop-loss’ level unchanged) would indicate that the bullish phase that started about two weeks ago has ended”.